Raw material price rise significant; semiconductor shortage may have trickle-down effect: Ceat

“Raw material cost increase has been substantial and we have been seeing this for the last 3-4 months or so. Natural rubber prices have shot up from Rs 120 per kg to Rs 155 per kg plus in India. International market prices have also gone up on account of other reasons. Crude derivatives have moved very differently compared to crude. While crude has moved up from $40-45 range to about $55, crude derivatives have gone up almost 80-100 percent. So we see about 15-16 percent impact on raw materials per kg. So it will impact margins if it is not translated into price increase,” he said.

Subbiah added that there will be around 8-10% impact on the finished product prices due to higher raw material cost. He said that they are taking appropriate pricing decisions to mitigate the raw material inflation and that company has taken some price hikes to pass on the impact.

Subbiah said that the demand continues to be robust and they have not seen the usual seasonal dip in January.

“Demand continues to be robust as we saw in Q3 of the year. Normally January tends to be a little soft; particularly winters, the demand for tyres is little lower. However, this time around we have not seen that, but it is in-line with what we saw in Q3. Normally Q4 is supposed to be good quarter, particularly the month of March when our dealers and distributers build up inventory for the season starting from April. Agri demand also picks up. So, we expect Q4 to be in-line with Q3 as far as demand is concerned,” he said.